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TMI Blog1971 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... -7-1971 - Judge(s) : D. K. MAHAJAN., H. R. SODHI. JUDGMENT The following question of law has been referred for our opinion by the Income-tax Appellate Tribunal, Delhi Bench "C" : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the provisions of section 34(1)(a) were rightly invoked? The assessee is an individual. The assessment year is 1954-55. The previous year ended on 31st March, 1954. The assessee was assessed on 31st March, 1959, under section 23(3) of the Income-tax Act, 1922, on a total income of Rs. 99,475, which included Rs. 48,802 as income from other sources. This assessment was not accepted by the assessee and ultimately his total income was determined Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no profit resulting from such sale was chargeable under section 10(2)(vii). All these contentions were rejected by the Income-tax Officer and he observed that there was profit under section 10(2)(vii) by reason of the sale of the building, machinery and furniture of the cold storage to the partnership and that the assessee had omitted to declare the same in his return of income filed before the Income-tax Officer in the course of the original assessment proceedings. Therefore, the profits of the sale of the building, machinery and furniture of the cold storage were brought to tax under section 34(1)(a). An appeal by the assessee to the Appellate Assistant Commissioner-met with no success and so also his further appeal to the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in this regard." The assessee then moved the Tribunal under section 66(1) and asked the Tribunal to refer the following questions of law for our opinion : "(i) Whether, on the facts and in the circumstances of the case, it could be validly held within the meaning of the provisions of section 34(1)(a) of the Income-tax Act, 1922, that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the year 1954-55 income, profits and gains chargeable to income-tax had escaped assessment for that year ? (ii) Whether, on the facts and in the circumstances of the case, there was any sale within the meaning of section. 10(2)(vii) of the Act ? (iii) If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer, to start with, that there was a sale of the building, machinery and furniture. It was not the case before the Income-tax Officer that there was no sale. The only stand before the Income-tax Officer was that the factum of sale was brought to the notice of the Income-tax Officer and that he was in the know of all facts and in spite of that did not bring to tax the profit resulting from the sale. It is, therefore, not open to the learned counsel to urge that there was in fact no sale. The entire proceedings from the start proceeded on the basis that there was a sale. The third contention of the learned counsel is based on the following observations of the Supreme Court in Malegaon Electricity Co. P. Ltd. v. Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten down value of the assets old, had not been included as profits in the return submitted by the assessee. It had also not shown the same in Section D of Part I of the return. It may also be noted that the assessee had not shown either in its return or in any of the documents submitted to the Income-tax Officer, the written down value of the assets sold, Hence, not only the Income-tax Officer was not told that the assessee had earned any profit under section 10(2)(vii) nor even the essential fact, viz., the written down value of the assets sold was supplied to him so as to enable him to find out the price in excess of the written down value realised by the assessee. It is true that if the Income-tax Officer had made some investigation, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disclose to the Income-tax Officer the fact that the price realised by it by sale of its assets was more than the written down value of those assets or at least the written down value of those assets amounts, in our opinion, to a failure on its part to disclose fully and truly the material facts necessary for its assessment. From the cryptic statement of the Income-tax Officer in the original assessment order that 'no adjustment is necessary' the Tribunal was not justified in drawing the inference that the Income-tax Officer had considered all the relevant facts." There is no denial that the facts of the present case and that of the Supreme Court, excepting the distinction have pointed out, are identical. The assessee in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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